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Hotpot chain Haidilao, carmaker BYD lead stocks higher as China’s central bank cuts banks’ reserve ratios to boost recovery from pandemic
- The Hang Seng Index advanced 0.6 per cent to 27,515.24 in Monday trading
- The cut in the reserve requirement ratio will unleash about 1 trillion yuan (US$154 billion) into the financial system, the PBOC said
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Hong Kong stocks rose for a second day after China’s central bank cut the amount of money commercial lenders must set aside as reserves in an effort to sustain a recovery from the pandemic.
The Hang Seng Index advanced 0.6 per cent to 27,515.24 at the close. The Hang Seng Tech Index, which last week saw a wipeout of more than US$600 billion in market cap from a February peak, rebounded by 1.1 per cent.
China’s Shanghai Composite Index added 0.7 per cent. The ChiNext gauge of small caps that are more sensitive to liquidity saw a 3.7 per cent surge.
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The 0.5 percentage point cut in the reserve requirement ratio, which was announced after the market closed on Friday, will unleash about 1 trillion yuan (US$154.5 billion) into the financial system, according to the People’s Bank of China. Still, the central bank said the cut does not signal a shift in general monetary policy, which has been normalised in the post-pandemic era.
Stocks in Hong Kong and the mainland risk running out of steam as Beijing reins in its unprecedented monetary stimulus to combat Covid-19 and renews its crackdown against technology giants with moves that have included putting ride-hailing giant Didi Global under cybersecurity review.
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